Hanwha Aerospace bids up to $1.2bn for Austal U.S. shipbuilding unit

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Hanwha bids for Austal US unit

Highlights

Austal granted Hanwha four weeks of due diligence for a potential acquisition of its U.S. shipbuilding unit, valued at up to $1.2bn and excluding Asia-Pacific operations.
Austal expects its U.S. unit to post an A$175mn operating loss for the fiscal year, yet shares surged 18.5 per cent, raising market value to A$1.9bn on deal news.
Hanwha's defence order backlog grew from Won20tn in 2022 to Won38.3tn in Q2 2024, with H1 operating profit up 44 per cent to Won2tn, supporting aggressive overseas expansion targets.

Bid terms and due diligence process

According to Financial Times, Austal said on Tuesday that Hanwha will be allowed four weeks of due diligence to strengthen its offer for the U.S. business, which sells ships to the navy and coastguard. The preliminary bid values the unit at up to $1.2bn and excludes Austal’s operations in Australia, the Philippines and Vietnam.

The move follows several unsuccessful attempts by Hanwha to acquire Austal more broadly. Last year, Canberra allowed Hanwha to raise its stake in Austal to 19.9 per cent, while placing limits on its influence over one of Australia’s most important defence companies.

Austal’s U.S. shipbuilding business is based in Mobile, Alabama, but the company said the unit is expected to post an A$175mn operating loss in the year to June 30 because of lossmaking legacy contracts. Even so, Austal derives about 80 per cent of its revenue from the U.S., making the business a strategic entry point for Hanwha into the American naval market.

Defence expansion and market impact

Investor reaction highlighted both the strategic appeal and the execution risks of the proposed deal. Austal shares jumped 18.5 per cent on Tuesday, lifting the company’s market value to A$1.9bn, while Hanwha shares fell 4.5 per cent.

Hanwha, which owns one of the world’s top 10 shipbuilders, has been intensifying efforts to capture a larger share of the U.S. shipbuilding market. The group acquired Philly Shipyard in Pennsylvania in 2024 and has modernised its infrastructure in anticipation of more work tied to naval maintenance, repair, operations and shipbuilding.

The broader push is supported by strong defence demand abroad. Hanwha’s order backlog has risen from Won20tn in 2022 to Won38.3tn in the second quarter of this year, while first-half operating profit increased 44 per cent year on year to Won2tn on sales of Won15tn, up 27.5 per cent. The company is targeting annual sales of Won70tn and operating profit of Won10tn by 2035 through overseas expansion, as Washington seeks to strengthen naval capacity and keep pace with China’s maritime build-up.

Our earlier article on the White House’s 90-day extension of the Jones Act waiver explained that the administration kept the exemption in place to ease fuel-transport bottlenecks and support domestic energy supply during a period of global market strain. We also noted that the renewal tightened the rules by shifting to case-by-case reviews for individual voyages, reflecting pushback from U.S. shipbuilders and lawmakers seeking to preserve core Jones Act protections.

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